SAFE Conversion Price

In an Equity Financing, the price per share is used to determine the total number of shares the Company will issue to SAFE holders. SAFEs often entitle holders to a share price that is lower than the price paid by Investors in the Equity Financing into which the SAFEs convert. This lower price, or Conversion Price, is calculated using a pre-negotiated Discount rate or Valuation Cap. The lower the Conversion Price, the more shares are issued to the SAFE holder and the more dilution the founders experience.

Shares of Preferred Stock issued to SAFE holders = Investment Amount / Conversion Price